Q4 2023 Extra Space Storage Inc Earnings Call

Okay.

Operator: Good day, and thank you for standing by. Welcome to the Extra Space Storage 4th Quarter 2023 Earnings Conference. At this time, all participants are in a listen-only mode.

Good day, and thank you for standing by.

Speaker Change: Welcome to the extra space storage fourth quarter 2023 earnings conference call.

Speaker Change: At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jeff Norman, Senior Vice President, Capital Markets. Please go ahead.

Speaker Change: After the Speakers' presentation, there'll be a question and answer session.

Speaker Change: Ask a question during the session you will need to press star one one on your telephone.

Speaker Change: You will then hear an automated message advising your hand is raised.

Speaker Change: To withdraw your question. Please press star one one again.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to Jeff Norman Senior Vice President Capital markets. Please go ahead.

Jeffrey Norman: Thank you, Liz. Welcome to Extra Space Storage's fourth quarter 2023 earnings call. In addition to our press release, we have furnished unaudited supplemental financial information on our website. Please remember that management's prepared remarks and answers to your questions may contain forward-looking statements, as defined in the Private Securities Litigation Reform Act. [inaudible] Future Risks and Uncertainties. Associated with the company, these forward-looking statements are qualified by the cautionary statements contained in the company's latest filings with the SEC, which we encourage our listeners to read. Forward-looking statements represent management's estimates as of today, February 28, 2025. The company assumes no obligation to revise or update any forward-looking statements because of changing market conditions or other circumstances after the date of this conference. I'd now like to turn the call over to Joe Margolis, Chief Executive Officer. Thanks, Jeff.

Jeff Norman: Thank you Liz.

Jeff Norman: Welcome to extra space storage is fourth quarter 2023 earnings call.

Jeff Norman: In addition to our press release, we have furnished unaudited supplemental financial information on our website.

Jeff Norman: Please remember that management's prepared remarks and answers to your questions may contain forward looking statements as defined in the private Securities Litigation Reform Act.

Jeff Norman: Actual results could differ materially from those stated or implied by our forward looking statements.

Jeff Norman: The risks and uncertainties associated with the Companys business.

Jeff Norman: These forward looking statements are qualified by the cautionary statements contained in the company's latest filings with the SEC, which we encourage our listeners to review.

Jeff Norman: Forward looking statements represent management's estimate estimates as of today February 28, 2024, the company assumes no obligation to revise or update any forward looking statements because of changing market conditions or other circumstances. After the date of this conference call I'd now like to turn the call over to Joe Margolis, Chief Executive Officer.

Joseph Daniel Margolis: And thank you, everyone, for joining today's call. We had a solid fourth quarter where we focused on optimizing the performance of the recently added life storage assets while maximizing the performance of the legacy extra space location. We were also very productive on the external growth front, adding another 74 third-party managed stores, eight stores through acquisition, and $129 million in bridge loans. Operationally, the Extra Space Same Store Pool maintained high occupancy and Solid In Place Rent, driving same-store revenue growth of 0.8% for the quarter. The core FFO in the quarter was $2.02 a share, and full year core FFO was $8.10 per share.

Joseph D. Margolis: Thanks, Jeff and thank you everyone for joining today's call.

Joseph D. Margolis: We had a solid fourth quarter, where we focused on optimizing the performance of the recently added life storage assets, while maximizing the performance of the legacy extra space locations.

Joseph D. Margolis: We were also very productive on the external growth front, adding another 74 third party managed stores eight stores, two acquisition and $129 million and bridge loans.

Joseph D. Margolis: Operationally the extra space same store pool maintained high occupancy and solid in place rents driving same store revenue growth of 8% for the quarter.

Joseph D. Margolis: Core <unk> in the quarter was $2.02 a share.

Joseph D. Margolis: And full year core <unk> was $8 10 per share.

Joseph Daniel Margolis: On our last call, we outlined that in order to reach the high end of our guidance range, we would need achieved rates to new customers to improve on a year-over-year basis. While demand was steady and allowed us to maintain strong occupancy, it was not strong enough to eliminate negative new customer rates, which remained at approximately negative 10% during the quarter. As a result, we faced the headwind of higher negative churn, and our full-year performance was near the midpoints of our same store and FFO range. Turning to life storage, one of the factors in our merger decision was our belief that we could enhance life storage property performance through our more sophisticated platform. Seven months removed from closing, we are happy to report that our assumptions have proved true. Customer acceptance of rent increases has been in line with our expectations.

Joseph D. Margolis: On our last call, we outlined that in order to reach the high end of our guidance range, we would need achieved rates to new customers to improve on a year over year basis.

Joseph D. Margolis: While demand was steady and allowed us to maintain strong occupancy it was not strong enough to eliminate negative new customer rates, which remained at approximately negative 10% during the quarter.

Joseph D. Margolis: As a result, we faced the headwind of higher negative churn in our full year performance was near the midpoint of our same store and <unk> ranges.

Turning to life storage one of the factors in our merger decision was our belief that we could enhance life storage property performance through our more sophisticated platform.

Joseph D. Margolis: Seven months removed from closing we are happy to report that our assumptions have proved true.

Joseph D. Margolis: Customer acceptance of rent increases has been in line with our expectations and we are seeing the net rent per square foot for legacy life storage customers move closer to that of nearby extra space locations.

Joseph Daniel Margolis: And we are seeing the net rent per square foot for legacy life storage customers move closer to that of nearby Extra Space locations. Occupancy is also responding positively. We saw the occupancy gap between the LSI and Extra Space Storage same-store pools tighten through the quarter, improving from a gap of 350 basis points at the beginning of the fourth quarter to a gap of 250 basis points at year end.

Joseph D. Margolis: Occupancy is also responding positively and we saw the occupancy gap between the LSI and extra space storage same store pools tightened through the quarter.

Joseph D. Margolis: Improving from a gap of 350 basis points at the beginning of the fourth quarter to a gap of 250 basis points at year end.

Joseph Daniel Margolis: Today, that gap has tightened further and is approximately 200 basis points. The occupancy improvement, together with the benefit of existing customer rent increases, resulted in legacy LSI same store revenue growth of 1.8 percent and an acceleration of 80 basis points over the third quarter growth. However, similar to the extra space properties, we continue to see new customer price sensitivity at the life storage location, resulting in lower than anticipated new customer rates. So while we are achieving the anticipated incremental outperformance we expected for the life storage assets, reaching full property-level synergies is taking longer than anticipated due to current market conditions, which we know will eventually normal.

Joseph D. Margolis: Today that gap has tightened further and is approximately 200 basis points.

Joseph D. Margolis: The occupancy improvement together with the benefit of existing customer rent increases resulted in legacy LSI same store revenue growth of one 8% in.

Joseph D. Margolis: An acceleration of 80 basis points over the third quarter growth rate.

Joseph D. Margolis: However, similar to the extra space properties, we continue to see new customer price sensitivity at the life storage locations, resulting in lower than anticipated new customer rates.

Joseph D. Margolis: So while we are achieving the anticipated incremental outperformance, we expected for the life storage assets.

<unk> full property level synergies is taking longer than anticipated due to current market conditions, which we know will eventually normalize.

Joseph Daniel Margolis: The current level of demand also influences our outlook for 2024. We are encouraged by our rental velocity, occupancy levels, existing customer health, length of stay, and the potential benefits of moderating new supply. However, these factors have not yet led to a material improvement in new customer rates.

Joseph D. Margolis: The current level of demand also influences our outlook for 2024.

Joseph D. Margolis: We are encouraged by our rental velocity.

Joseph D. Margolis: Occupancy levels existing customer health length of stay and the potential benefits of moderating new supply.

Joseph D. Margolis: However, these factors have not yet led to material improvement in new customer rates.

Joseph Daniel Margolis: We are confident we can hold strong occupancy and generally maintain current revenue levels. But we believe it will be difficult to drive a reacceleration in revenue growth until we regain pricing power with new customers. We are seeing some positive signs that we are getting closer.

Joseph D. Margolis: We are confident we can hold strong occupancy and generally maintain current revenue levels, but.

Joseph D. Margolis: But we believe it will be difficult to drive a re acceleration in revenue growth until we regain pricing power with new customers.

Joseph D. Margolis: We are seeing some positive signs that we are getting closer and given our strong occupancy levels when pricing power returns, we are very well positioned to push rates quickly.

Joseph Daniel Margolis: And given our strong occupancy levels, when pricing power returns, we are very well positioned to push rates quickly. We just have not seen enough progress to date to feel confident this inflection will be in time for the 2024 leasing season or to include this scenario in our guidance. So while the industry as a whole will likely face headwinds from lower new customer rates in the near term, the long-term outlook for our sector, and for Extra Space Storage specifically, remains bright. Storage has consistently proven to be a remarkably durable asset class, and Extra Space Storage has the largest and most diverse portfolio in the industry. New supply continues to moderate, and the headwinds to future new development are substantial and increasing. We have a very strong third-party management and bridge loan pipeline, and a robust joint venture program.

Joseph D. Margolis: We just not we just have not seen enough progress to date.

Confident this inflection will be in time for the 2020 for leasing season or to include this scenario in our guidance.

Joseph D. Margolis: So while the industry as a whole will likely face headwinds from lower new customer rates in the near term.

Joseph D. Margolis: The long term outlook for our sector and for extra space, specifically remain bright.

Joseph D. Margolis: Storage has consistently proven to be a remarkably durable asset class and extra space storage has the largest and most diverse portfolio in the industry.

Joseph D. Margolis: New supply continues to moderate and the headwinds to future new development are substantial and increasing.

Joseph D. Margolis: We have very strong third party management and bridge loan pipelines and our robust joint venture program and I am confident in our ability to further scale our capital light growth activities.

Scott: And I am confident in our ability to further scale our capital light growth activity. We expect outsized relative growth from our LSI assets in 2024, with additional synergies to be unlocked as the rental environment improves. And as I mentioned, our occupancy today is over 93% at what is normally our low point for the year. Once demand improves, we are very well positioned to capture it. I will now turn the time over to Scott.

Joseph D. Margolis: We expect outsized relative growth from our LSI assets in 2024 with additional synergies to be unlocked as the rental environment improves.

Joseph D. Margolis: And as I mentioned, our occupancy today is over 93% at what is normally our low point for the year.

Joseph D. Margolis: Once demand improves we are very well positioned to capture it.

Scott: [inaudible] Our results were generally in line with our expectations, with a few exceptions. As Joe already covered, lower new customer rates caused revenue growth to come in modestly below our internal estimate. The revenue miss was partially offset by lower-than-expected property taxes.

Joseph D. Margolis: I will now turn the time over to Scott.

Scott: Thanks, Joe and Hello, everyone.

Scott: Our results were generally in line with our expectations with a few exceptions.

Scott: As Joe already covered lower new customer rates cause revenue growth to come in modestly below our internal estimate.

Scott: The revenue Miss was partially offset by lower than expected property taxes. We also had a beat from G&A savings, partially offset by lower than modeled tenant insurance.

Scott: We also had a beat from GNA Savings, partially offset by lower-than-modeled tenant insurance. However, all of our other income and expense line items were generally in line with our forecast. As of January 1st, we've completed the migration of the life storage customers to our tenant insurance program, and we believe we will achieve $16 million in synergies from tenant insurance, exceeding our original estimate by $4 million in 2024. Our G&A run rate from Q4 is lower than our expected 2024 full-year run rate as we continued hiring during the fourth quarter, and we have some G&A seasonality. We now expect to realize 2024 DNA synergies of $39 million, an increase of $16 million over our original forecast of $23 million.

Scott: All of our other income and expense line items were generally in line with our forecast.

Scott: As of January one.

Scott: We have completed the migration of the life storage customers to our tenant insurance program and we believe we will achieve $16 million in synergies from tenant insurance exceeding our original estimate by $4 million in 2024, our G&A run rate from Q4 is lower than our expect.

Scott: In 2020 for full year run rate as we continued hiring during the fourth quarter and we have some G&A seasonality.

Scott: We now expect to realize 2020 for G&A synergies of $39 million, an increase of $16 million over our original forecast of $23 million.

Scott: Turning to the balance sheet, we completed a $600 million bond offering in the fourth quarter and another $600 million bond offering in the first quarter of 2024. We have used the proceeds from these offerings to pay off the $1 billion variable rate bridge loan we obtained in conjunction with the closing of life storage.

Scott: Turning to the balance sheet, we completed a $600 million bond offering in the fourth quarter and another $600 million bond offering in the first quarter of 2024, we have used the proceeds from these offerings to pay off the $1 billion variable rate bridge loan we obtained in conjunction with the close.

Scott: Our only remaining 2024 loan maturities can be extended at our option, and we have plenty of dry powder if opportunities arise in the market. In last night's earnings release, we provided our 2024 outlook for both the Extra Space and Legacy Life Storage Same Store Pools. We have provided wider same-store revenue and NOI ranges to capture the different scenarios we believe are possible, given the unusual 2023 comparables and uncertainty around new customer pricing. With interest rates potentially remaining higher for longer, our guidance does not assume a material improvement in the housing market during the summer leasing season.

Scott: <unk> life storage, our only remaining 2024 loan maturities can be extended at our option and we have plenty of dry powder, if if opportunities arise in the market.

Scott: In last Night's earnings release, we provided our 2020 for outlook for both the extra space and legacy life storage same store pools.

Scott: We have provided wider same store revenue and NOI ranges to capture the different scenarios. We believe are possible given the unusual 2023 comparable and uncertainty around new customer pricing with interest rates potentially remaining higher for longer our guidance does not assume a material improvement.

Scott: <unk> in housing in the housing market.

Scott: During the summer leasing season.

Scott: For the EXR same store pool, our same store revenue guidance is negative 2% to positive 0.5%. Our expense growth range is 4 to 5.5% driven by marketing, insurance, and property taxes, resulting in an NOI range of negative 4.25% to negative 0.5%. For the legacy LSI same store pool, we expect stronger property level growth, with same store revenue ranging from 2 to 4.5%. Additionally, we expect outsized expense growth at the LSI stores in 2024, especially in the first half of the year.

Scott: For the ESR same store pool, our same store revenue guidance is negative 2% to positive <unk>, 5%.

Scott: Our expense growth range is four to five 5% driven by marketing insurance.

And property taxes, resulting in an NOI range of negative $4, two 5% to negative <unk>, 5%.

Scott: For the legacy LSI same store pool, we expect stronger property level growth with same store revenue ranging from two to four 5%.

Scott: We expect outsized expense growth at the LSI stores in 2020 for especially in the first half of the year.

Operator: This will be driven by higher payroll, as we have brought the LSI stores back to full staffing levels. Additionally, we expect additional expense pressure on repairs and maintenance, property taxes, and property insurance, resulting in a range of 6.25% to 7.75%, yielding a life storage same store NOI range of negative 0.25% to positive 4%. And with that, Liz, let's open it up for questions. As a reminder, to ask a question, you'll need to press star 1 1 on your telephone and wait for your name to be announced.

Scott: This will be driven by higher payroll as we have brought the LSI stores back to full staffing levels. We expect additional expense pressure on repairs and maintenance property taxes and property insurance, resulting in a range of 6.25% to 7% and three quarter percent.

Scott: Yielding at life storage same store NOI range of negative <unk>, 5% to positive 4%.

Scott: Our core <unk> range for 2024 is $7 85 days.

Scott: $8 15 per share and assumes the full year impact of the shares and that added through the life storage merger and with that Liz let's open it up for questions.

Liz: As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.

Jeffrey Alan Spector: To withdraw your question, please press star 1 once again. Please stand by while we compile the Q&A roster. Our first question will come from Jeff Spector with Bank of America. Thank you. Thank you. Thank you.

Liz: Withdraw your question. Please press star one again.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Our first question will come from the line of Jeff Spector with Bank of America.

Jeff Norman: Hi, This is <unk> on for Josh.

Jeff Norman: Just I guess going back to Jos.

Jeff Norman: Joe's opening comments on not really.

Speaker Change: Having the confidence right now to include.

A scenario.

Speaker Change: Pushing new rate.

Joseph Daniel Margolis: Joe's opening comments. [inaudible] I'm not assuming a rebound. Um, so I guess they're for sale. [inaudible] Guide.

Speaker Change: More quickly and not assuming a rebound in housing.

Speaker Change: So I guess.

Speaker Change: If you could provide color on.

Speaker Change: What your assumptions are for new move in rates.

Speaker Change: How that should trend.

Speaker Change: In Q.

Our end versus the higher end of that.

Speaker Change: Same store Brad.

Speaker Change: Good.

That would be helpful.

Speaker Change: So.

Joseph Daniel Margolis: So our guidance is really revenue-based, and new move-in rates to customers are one component. We're a little agnostic between occupancy and new move-in rates and the ECRI program, and promotions and all the various components that go into the revenue assumptions that produce our guidance are, as I said, and you indicated, we don't see enough now to guide to a strong rebound in the housing market in time for the leasing season. We still see price sensitivity from new customers, although rental demand is good, and we've had a really good start to this year. But we don't think interest rates are going to go down in time to have a material impact on the leasing season.

Speaker Change: Our guidance is really revenue based and new move in rates to customers are one component.

Speaker Change: We're a little agnostic between occupancy and new move in rate and E Cri program.

Speaker Change: Promotions and all the various components that go into the revenue assumptions that produce our guidance.

Speaker Change: As I said and you indicated.

Speaker Change: We don't see enough now to guide to a strong rebound in the housing market in time for the leasing season, we still see.

Speaker Change: Price sensitivity from new customers, although rental demand is good and we've had a really good start to this year.

Speaker Change: We don't think interest rates are going to go down in time to have a material impact on the leasing season.

Joseph Daniel Margolis: So while we don't have a crystal ball, we thought a reasonably prudent course of action would be not to assume that rebound. Yeah, Lizzie, maybe to add a little bit more color to Joe's comments, our guidance, the base case assumes that we do have sequential rate growth on a month over month basis from now into our leasing season, but just not enough to necessarily close that negative gap that we're experiencing today and others, as my follow-up question noted. The Bulletproof Executive 2013, guys. Day. Hinep, you're out.

Speaker Change: So while we don't have a crystal ball we thought.

Speaker Change: A reasonably prudent guidance would be not to assume that rebound.

Speaker Change: Yes, Lindsay maybe to add a little bit more color to Joe's comments, our guidance. The base case assumes that we do have sequential rate growth on a month over month basis from now into a leasing season, but just not enough to necessarily close that negative gap that we're experiencing today.

Lindsay: Okay. That's helpful. Thank you.

Lindsay: And as.

As my follow up question.

Lindsay: We just noticed that the.

Lindsay: The assumption on the sofa curved driving interest expense.

Lindsay: <unk> guidance.

Lindsay: It seems a bit aggressive just based on where.

Lindsay: So for sits today, so could you just walk through.

Lindsay: Kind of your outlook on.

Scott: [inaudible] and What's Embedded Yeah, so as we were preparing our guidance and preparing our annual budget, the SOFR curve was moving around quite a bit. We saw it moving almost every day. So we picked a point in time that had an average of 4.75. That was approved probably a week and a half ago, when we finalized it. And we figured it'd move throughout the year. But that's the assumption we made in our, Thanks, Fuzzy. Our next question will come from the line of Michael Goldsmith with UBS. Good afternoon.

Speaker Change: Right and what's embedded in guidance in terms of debt and refi activity.

Speaker Change: Yes, so as we were preparing our guidance and preparing our annual budget for sofa curve was moving around pretty.

Speaker Change: Quite a bit we saw moving almost everyday so we've picked a point in time that had an average of $4 75 that was approved probably a week and a half ago when we finalize the end.

Speaker Change: We figure it will move throughout the year, but that's the assumption we've made in our guidance.

Speaker Change: Yes, yes.

Speaker Change: Thanks Rosy.

Speaker Change: Our next question will come from the line of Michael Goldsmith with UBS.

Michael Goldsmith: Thanks a lot for taking my questions. My first question is just about the kind of strategy of increasing occupancy and cutting street rates and then using ECRI as a lever to drive rent growth. You know, has that held up?

Michael Dillon: Good afternoon, and thanks, a lot for taking my questions. My first question is just on the kind of the strategy.

Michael Dillon: Increasing occupancy and cutting street rate and then using ECR I as a lever to to drive rent growth.

Michael Goldsmith: Has that strategy been effective through the quarter? And then, along with that, can you talk a bit about just the customer's reception of ECRIs. Has that changed at all? Sure, Michael.

Michael Dillon: Has that held up as that strategy been effective through the through the quarter and then.

Michael Dillon: Along with that can you.

Michael Dillon: Talk a bit about just the customers' reception to ECR is has that changed at all.

Speaker Change: Sure Michael So.

Joseph Daniel Margolis: So our strategies are designed to maximize long-term revenue, not to maximize incoming rate or any other metric. And all the testing we do, that we constantly do, shows that to lean into occupancy a little more, lean into acquiring web customers at lower rates because they tend to be the longer-term customers, and Rely on ECRI produces the best long-term revenue growth. Customers' acceptance of ECRI has not changed at all.

Speaker Change: Our strategies are designed to maximize long term revenue not to maximize incoming rate or any other metric.

Speaker Change: All of the testing.

Speaker Change: We do that we constantly do shows that too.

Leanne into occupancy a little more lean into acquiring web customers at lower rates, because they tend to be the longer term customers.

Speaker Change: And rely on ECR awry produces the best long term revenue growth.

Speaker Change: Customers acceptance CV Cri has not changed at all we monitor that every month as we send out east Cri notices and we have not seen any increase in customers vacating the stores because of the cri.

Joseph Daniel Margolis: We monitor that every month as we send out ECRI notices, and we have not seen any increase in customers leaving the stores because of ECRI. So we believe this strategy is both valid and working. Thank you for that, and um, my follow-up question is just on the... is on the, is on the life storage portfolio. Can you kind of, you know? It sounds like the stuff that you can control within the integration and the environment has been working well. It's kind of some of the stuff that, you know, that is plaguing the industry, which is kind of the slower demand and the slower demand and also just the pressure on rates is kind of weighing on the ability to generate synergies. Is that right? And then does that kind of change the path to generate the synergies that you expected?

Speaker Change: So we believe this strategy is both valid and working.

Speaker Change: Sure.

Speaker Change: Thank you for that.

Speaker Change: My follow up is just on the.

Speaker Change: Is on the.

Speaker Change: On the life storage portfolio can you kind of.

Speaker Change: It sounds like the stuff that you can control within the integration and the environment.

Speaker Change: Has been working well.

Speaker Change: Kind of some of the stuff.

Speaker Change: That is plaguing the industry, which is kind of the slower demand in the.

Speaker Change: The slower demand and also just the pressure on rates.

Speaker Change: <unk>.

Speaker Change: It's kind of weighing on the ability on the ability to generate synergies is that right and then.

Speaker Change: Does that kind of change the path to generate the synergies that you expected, whereas like it will not necessarily be.

Joseph Daniel Margolis: Whereas it will not necessarily be generating them all in 24, but it may require a kind of a multi-year process to reach that kind of synergy number that you had initially thought of. It's a great question. And I think it's an accurate assessment of what's going on. You know, the things we control, like GNA and tenant insurance, are not only working, but they are working better, as Scott pointed out in his comments, than underwritten. And we're not done there. We're going to continue to look for further savings in those areas. We're outbidding contracts to get savings from the greater scale that we have now. We're going to continue to work real hard to improve on those numbers. What's also working is that the life storage properties do perform better and are trending better on our system. But the headwind that we face that we don't control is the market condition. And that is slowing down the achievement of the full underwritten property synergy.

Speaker Change: Generating them all in 'twenty four but.

May require a kind of a multiyear process to to reach that kind of a synergy number that you had initially thought of.

Speaker Change: Yes, it's a great great question and I think it's accurate assessment of what's going on.

Speaker Change: The things, we control like G&A and tenant insurance.

We're not only.

Speaker Change: Working but working better as Scott pointed out in his comments than underwritten.

Speaker Change: And we're not done we're going to continue to look for further savings in those areas were out bidding contracts to get.

Speaker Change: Savings from the greater scale that we have now we're going to continue to work real hard to improve on those numbers.

Speaker Change: It's also working is that the life storage properties do perform better and are trending better on our systems.

Speaker Change: But the headwind that we face that we don't control is the market conditions.

Speaker Change: And that is slowing down the achievement of the full underwritten property synergies.

Scott: So two things are going to happen. The mix of what contributes to the targeted synergies is going to change. And there's going to be less near-term contribution from the properties and more near-term contribution from the other aspects. And depending on where you are in our guidance, it could potentially not occur until after this year. You know, at the high end of our guidance, we'll get real close, and at the lower end of our guidance, we'll fall somewhat short. Our next question will come from Todd Thomas with KeyBank Capital Markets. Hi, thanks. First, I just wanted to see if you could talk a little bit more about the differences that you're forecasting for same store revenue growth. The EXR and LSI portfolios, if you can expand a little bit on the primary drivers behind, Transcribed by https://otter.ai and many more. Hey, Todd. It's Scott.

Speaker Change: So two.

Speaker Change: Two things are going to happen.

Speaker Change: The mix of what contributes to the targeted synergies is going to change and there is going to be less near term contribution from the properties and more near term contribution from the other aspects.

Speaker Change: And.

Speaker Change: Depending on where you are in our guidance it potentially could could not occur until after this year.

At the high end of our guidance, we'll get real close in at the lower end of our guidance will.

Speaker Change: Fall somewhat short.

Our next question will come from the line of Todd Thomas with Keybanc capital markets.

Todd M. Thomas: Hi, Thanks.

Todd M. Thomas: First I just wanted to see if you can talk a little bit more about the differences.

Todd M. Thomas: That you are forecasting for same store revenue growth between the ESR and LSI portfolios.

Todd Michael Thomas: So a couple of things. One is the occupancy delta. So, midsummer last year, you had 400 basis points difference between the two pools. And when we, at the end of the year, we are 250 basis points different. Today, we're about 200 basis points different. Through February, we continued to increase occupancy at the life storage properties at a time when we were clearing up some auctions. So during the fourth quarter, we had quite a few auctions there, and so you had more churn than is normally happening. On the positive side, at those stores, we have seen customers accept the ECRIs.

Todd M. Thomas: You can expand a little bit on the primary drivers behind those differences and discuss trends that youre seeing in occupancy and any differences in move in rates for for those two portfolios.

Speaker Change: Okay, Hey.

Speaker Change: Hey, Todd it's Scott So couple of things one is the occupancy Delta. So Midsummer last year, you were 400 basis points difference between the two pools.

Scott: When we.

Scott: Ended the year were 250 basis points different today, we're about 200 basis points different through a through February we've continued to increase occupancy at the life storage properties at a time when.

Scott: We recorded up some auctions so during the fourth quarter, we had quite a few auctions there and so you had more churn than is normally happening on the positive side at those stores, we have seen customers accept the ECR eyes.

Scott: And they have actually moved out at a slightly lower rate than the extra space customers receiving ECRIs, so that's the good news. The thing that has been a bit of a headwind has been the current market conditions. And so we do expect the occupancy gap to close here during this rental season. And we expect to start closing the rate gap also. Today, their stores are priced as much as 10% lower than the extra space stores.

Scott: And they have actually moved out at a slightly lower rate than the extra space customers receiving ECR is so that's the good news.

Scott: Thing that has been a bit of a headwind has been the current market conditions.

Scott: And so we do expect the occupancy gap to close here in this rental season, and we expect to start closing the rate gap also today their stores are priced as much as 10% lower than the extra space stores and is that occupancy gap closes we would expect to close that gap also.

Scott: And as that occupancy gap closes, we would expect to close that gap also. Okay, and then it sounded like, I think, Joe, you said that you were encouraged by the rental activity and what you're seeing so far early in the year. Are you able to provide an update on January and February, you know, October? Yeah, the occupancy as of today is 93.1 on the Extra Space same-store pool. And so, you know, good news. The occupancy delta at the end of the year was a negative delta of 110 basis points.

Scott: Okay.

Speaker Change: Okay, and then it sounded like I think Joe you said that you're encouraged by the rental activity and what you're seeing so far.

Early in the year.

Speaker Change: Are you able to provide an update on on January and February.

Speaker Change: Occupancy and move in rate trends.

Joseph D. Margolis: Yeah, the occupancy as of today is 93, one on the extra space same store pool and so good news occupancy Delta at the end of the year was a negative delta of 110 basis points today. It's a positive 40 basis point Delta saw strong rentals in the month of January.

Scott: Today, it's a positive 40 basis point delta, so strong rental in the month of January. Now, maybe the downside of that is it has come a bit at an expensive rate. Our new customer rate, we've still found some pushback on rates. Rates in the fourth quarter were down 10%, as mentioned in the prepared remarks.

Joseph D. Margolis: Now the maybe the downside of that is it has come a bit at the expense of rate our new customer rate. We still found some pushback on rate rates in the fourth quarter were down 10% as Matt mentioned in the prepared remarks. During January February they are down about 17%, but to add some context too.

Scott: During January and February, they were down about 17%. But to add some context to that, we pushed rates really hard last year. And so, we have actually increased rates again this year, December through the end of February, but just not as much as we pushed them last year. So, the good news is occupancy is moving in the right direction or, you know, at a time of year when you're usually losing occupancy, but it is coming at the expense of new customer rates. Okay, and that's for the EXR leg that you're on.

Joseph D. Margolis: That.

Joseph D. Margolis: We pushed rates really hard last year and so we have actually increased rates again. This year December through the end of February but just not as much as we push them last year. So good news is the occupancy is moving in the right direction at a time of year when you usually losing occupancy, but it is coming at the expense of.

Joseph D. Margolis: A new customer rate.

Speaker Change: Okay and Thats for the ESR.

Legacy same store that you're referring to.

Scott: I'm referring to the new same-store pool, which is slightly different, but the old same-store pool occupancy moved almost exactly the exact same, and that's the extra space, same store pool. The life storage, the legacy pool, the occupancy delta, as I mentioned, as of today is about 200 basis points, as opposed to at the end of December, it was 250. Okay, that's helpful. OK. Does the change in the same store pool for either EXR or LSI have..., and many more.

Speaker Change: Yes, I'm, referring to actually the new same store pool, which is slightly different but the old same store pool occupancy moved almost the exact same and that's the extra space.

Speaker Change: Same store pool.

Speaker Change: <unk> storage the legacy pool.

Speaker Change: Occupancy Delta as I mentioned as of today is about 200 basis points as opposed to debt at the end of December It was 250 basis points.

Speaker Change: Okay. That's helpful.

Speaker Change: <unk>.

Speaker Change: Okay.

Speaker Change: Does the change in the same store pool for either ESR LSI have have any.

Todd Michael Thomas: I appreciate that. So there's not going to be any change in the LSI pool; we're keeping it the exact same. The extra space pool, the benefit in revenues this year is going to be about 40 to 50 basis points, similar to what we've seen in the past. And the occupancy delta as of today, some 30 basis points of that delta is being generated by the change in pool. So it's moved between December and today by about a hundred and 40, and 150 basis points, and 30 basis points of that is due to the change in pool. Great. Thanks, Todd. Our next question will come from the line of Samir Khanal with Evercore ISI. Hi, good morning, everyone.

Speaker Change: <unk> had meaningful impact.

Speaker Change: Yes, so theres not going to be any change in the OSI pool were keeping at the exact same the extra space pool. The benefit in revenues. This year is going to be about 40% to 50 basis points similar to what we've seen in the past and the occupancy delta as of today. Some of about 30 basis points of that Delta has been generated by.

Speaker Change: The change in pool, so its moved between December and today about 100.

Speaker Change: 40 to 150 basis points or 30 basis points of that is due to the change in pool.

Speaker Change: Okay, great. Thank you. Thanks.

Thanks Todd.

Speaker Change: Okay.

Speaker Change: Our next question will come from the line of Samir Khanal with Evercore ISI.

Samir Khanal: Hi, Good morning, everyone I guess, Scott can I can I ask you to comment on expenses.

Scott: I guess, Scott. Can I ask you to comment on expenses? The midpoint is 475, but help us think through the various line items. Yeah, so the extra space pool, you know, the midpoint 475 includes an increase in payroll that is inflationary to slightly plus, but you know, call it 3%. The biggest line item in terms of dollar increase is marketing, which includes, you know, it's the upper teens in terms of increase year over year, and we're expecting to continue to have to spend on marketing. We saw that increase as we moved through 2023. Property taxes are between two and 3%.

Samir Khanal: The midpoint is $4 75, but help us think through the various line items.

Scott: Yes, so the extra space pool, the midpoint $4 75 includes an increase of payroll that is inflationary to slightly plus but call it 3%.

Scott: Biggest line item in terms of dollar increase is marketing, which.

Scott: Includes upper teens in terms of increase year over year, and we're expecting to continue to have to spend on the marketing we saw that increase as we move through 2023.

Scott: Property taxes are between 2% and 3% and then tenant insurance is the biggest line item with closer to 20% I'm, sorry property and casualty insurance is closer to 20%.

Scott: And then tenant insurance is the biggest line item, with closer to 20%. I'm sorry, property and casualty insurance is closer to 20%. Okay, got it. And just switching gears here, maybe on revenue growth, maybe comment on kind of what you're seeing, maybe in the New York region. I looked at your sort of top three markets, LA and Atlanta, you know, holding up versus maybe New York, down about 150 bps sequentially. So maybe give a bit more color on the New York, New Jersey market. Thanks. Sure. So.

Speaker Change: Okay got it and just switching gears here maybe on revenue growth.

Maybe comment on kind of what Youre seeing.

Speaker Change: Maybe in the New York region I looked at your sort of top three markets L a and Atlanta.

Speaker Change: Holding up.

Speaker Change: Versus maybe New York down about 150 bps sequentially, so maybe give a bit more color on.

Kind of the New York, New Jersey market. Thanks.

Speaker Change: Sure so.

Scott: The New York, New Jersey MSA market is, I think it's being driven down or negatively impacted by northern New Jersey. So if you look at the borough, the borough continues to outperform our portfolio as it has for the last three or four quarters. You know, New York was a laggard for a while. And now New York, you know, markets rotate. Now New York is performing very well. But Northern New Jersey, in particular, is dragging down the overall MSA.

Speaker Change: The New York New Jersey.

Speaker Change: <unk> market is.

Yeah.

Speaker Change: I think it's being.

Speaker Change: Okay.

Driven down are negatively impacted by northern New Jersey. So if you look at the Bureau, the Bureau continues to outperform our portfolio as it has for the last three or four quarters, New York was.

A laggard for a while and now New York markets rotate.

Speaker Change: Now New York is performing very well.

Speaker Change: But northern New Jersey in particular is is dragging down the overall MSA performance.

Scott: Okay, thank you. Thanks, Samir. Our next question will come from the line of Nick Yulico with Scotiabank. Thanks. Hi, everyone.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks Samir.

Speaker Change: Our next question will come from the line of Nick <unk> with Scotiabank.

Speaker Change: Yeah.

Scott: In terms of, you know, the move-in and move-out rates, that's very helpful in the disclosure. Can you just give us a feel for how you're thinking about that, you know, sequential benefit, which you did cite some sequential benefit expected in the move-in rates this year? You know, is it going to be a similar shape to last year, how it played out in terms of looking at, say, you know, mid-year move-in rates versus, you know, the ending fourth-quarter rates in 2022? We would expect it to be somewhat of a bell curve with, you know, less negative churn in the summer months than today. You know, this is kind of the depths of that negative churn at the end of the year till the end of February.

Nick: Thanks, Hi, everyone in terms of.

Nick: The move in move out rates, that's very helpful disclosure can.

Nick: Can you just give us a feel for how youre thinking about that.

Nick: Sequential benefit, which you did cite some sequential benefit expected in the move in rates this year.

Nick: Is it going be a similar shape to last year, how it played out in terms of looking at say midyear moving rates versus.

Nick: The ending fourth quarter rates.

Nick: Rates in 2022.

Nick: We would expect it to be somewhat of a bell curve with.

Nick: Less negative churn in the summer months than today. This is kind of the depths of that negative churn ended the year till end of February.

Scott: And that's, you know, that 35 negative 35% that you saw in our SOPS, but we would expect it to go more similar. And you know, we hope to get rate power, we hope to flatten that out someway. Okay, great.

And Thats that 35 negative 35% that you saw in our subs, but we would expect it to go more similar and we hope to get rate power, we hope to flatten that out somewhat.

Scott: Thanks, Scott. Just one other question. On the 20 cents of, you know, dilution from acquisitions and such, is that relating to, you know, something more than the $250 million of acquisitions in the guidance? Is there some impact from last year? It just seems a lot for like a, I think it's about a $44 million overall number, so I just wanted to make sure I understood what that related to.

Speaker Change: Okay, great. Thanks, Scott just one other question on the 20 <unk> of.

Speaker Change: Dilution from acquisitions and such.

Speaker Change: Is that is that relating to.

Speaker Change: Something more than the $250 million of acquisitions in the guidance is there some impact from last year just seem to lie for like a.

Speaker Change: About $44 million overall numbers I, just want to make sure I understood what that related to.

Sam: This is Sam.

Scott: This is the impact of last year's lease up assets, including Certificates of Occupancy and this year's, so it's things that aren't in the same store pool. Okay, perfect. Appreciate it. Thanks. Thanks, Nick. Our next question will come from the line of Spenser Allaway on Green Street. Hi, can you guys hear me?

Sam: This is the impact of last year's lease up assets, including certificate of occupancy and this year, so things that aren't in the same store pool basically.

Speaker Change: Okay perfect I appreciate it thanks.

Speaker Change: Thanks, Nick.

Speaker Change: Our next question will come from the line of Spenser <unk>.

Spenser: With Green Street.

Spenser: Hi can you guys hear me.

Spenser Bowes Allaway: Yes, we can, Spenser. I'm sorry, yeah, my audio cut out. Thank you. Maybe we could just circle back to expense management. Again, just given the environment and there being minimal new customer demand, how important do you view marketing aggressively right now when customers are presumably making storage decisions based on proximity? So I just want to clarify, there's not minimal new customer demand; we're still renting an awful lot of units every month. It's just that the price sensitivity of those customers is such that, you know, we're not successful in pushing prices, marketing spend. I'm No, no, no, that's a that I was going to say that's a fair point.

Spenser: Yes, we cant Spencer.

Spenser: Im sorry, yes.

Spenser: Thank you.

Spenser: Maybe we could just circle back to expense management, and again, just given the environment and theyre being minimal new customer demand.

Spenser: <unk> marketing aggressively right now and customers are presumably making storage decision based on proximity and price.

Spenser: So.

Spenser: I just want to.

Speaker Change: Clarify theres not minimal new customer demand, we're still renting an awful lot of units every month.

Speaker Change: Just that the price sensitivity of those customers is such that.

We were not successful in pushing prices.

Speaker Change: Yes.

Speaker Change: Marketing spend.

Speaker Change: I'm sorry.

Speaker Change: No no no.

Joseph Daniel Margolis: So thank you for the clarification. Sure. So marketing spend, which is only about 2% of revenue, we really look at as an investment. We're happy to spend or willing to spend marketing dollars as long as we can get an ROI on those dollars. And we have a metric that we use to make sure we're getting a good return on every marketing dollar we spend. Okay, thank you. And then can you comment on how the cost of marketing, like in terms of Google clicks and ad space today, compares with historical norms? Just trying to understand how that fares relative to historical norms and trying to understand if some of the increase in marketing is just due to a higher absolute cost of advertising versus maybe the amount you're advertising versus last year. It is slightly higher.

Speaker Change: It's a fair point so thank you for the clarification.

Speaker Change: Sure So marketing spend which is only about 2% of revenue we really look at as an investment we're happy to spend are willing to spend the marketing dollars as long as we can get an ROI in those dollars and we have a metric that we use to.

Speaker Change: To make sure we're not.

Speaker Change: We're getting a good return on every marketing dollar we spend.

Speaker Change: Okay. Thank you and then can you can you comment on helicopter marketing like in terms of Doubleclick AD space today compares with historical norms, just trying to understand that.

Speaker Change: How that fares relative to historic norms and trying to understand if some of the increase in marketing is just due to higher absolute cost about advertising versus maybe the amount you're advertising versus last year.

Scott: That's certainly a factor. We also are using spare feet more than we have in the past. It was a lesson we learned from the LSI merger, and that has a slightly higher... Thanks. And then maybe just one last one, if I can, just looking at your marketing performance, can you just, market performance, excuse me, can you just comment on what was driving the expense cut in your Chicago market? and its property tax appeals.

Speaker Change: It is slightly higher.

Speaker Change: That's certainly a factor we also.

Speaker Change: Using square foot more than we have in the past it was a lesson we learned from the LSI merger.

Speaker Change: And that has a slightly higher cost.

Speaker Change: Okay. Thanks, and then maybe just one last one if I can just looking at your marketing performance can you just market performance excuse me can you just comment on what was driving expense cut in your Chicago market.

Speaker Change: Yes, its property tax appeals.

Scott: So it's successful appeals, and so you had negative expenses effectively in some of those stores. Great, thank you. Thanks, Spencer.

Speaker Change: So its successful appeals and so you had negative expense effectively in some of those stores.

Speaker Change: Okay, great. Thank you.

Speaker Change: Expenses, Thanks Spencer.

Scott: Our next question will come from the line of Eric Wolfe with Citi. Hey, thanks. You mentioned that LSI rates are getting a bit closer to Legacy EXR in the same submarket, but still 10% below. Just curious, if you achieve your guidance for this year, it sounds like maybe you'd still have another call at 8 or 9% on a rate to get to a similar level. Is that the right way to think about it?

Speaker Change: Our next question will come from the line of Eric Wolfe with Citi.

Eric Wolfe: Hey, thanks.

Eric Wolfe: You mentioned that <unk> rates were getting a bit closer to legacy <unk>.

Eric Wolfe: And the same submarkets, but still 10% below but just curious if you achieve your guidance for this year. It sounds like maybe it's still have another call it eight or 9% on rate to get a similar level as that.

Scott: So depending on where you are in the range of that, you know, the rates do go up, and we do assume that they'll move in the right direction. And we are seeing that as you move throughout the year, the fourth quarter, compared to the third quarter, is a normal time when you do see rent per square foot tick down. That's not odd.

Right way to think about it.

Eric Wolfe: So depending on where you are in the range that rates do go up and we do assume that they'll move in the right direction and we're seeing that as you move throughout the year, the fourth quarter compared to the third quarter as a normal time when you do see rent per square foot ticked down that's not odd you saw that in the portfolio. It was also impacted.

Scott: You saw that in the portfolio. It was also impacted a bit by some of the churn from auctions. But as we move into January and February, we are seeing that rent gap continue to close and move in the right direction. And then, in your January slide deck, you shared that 62% of customers are staying longer than 12 months, and 45% longer than two years. I was just curious what type of ECRIs these customers are getting versus shorter-duration customers.

Eric Wolfe: And a bit by some of the churn from auctions, but as we move into January February we are seeing that rent gap continue to close and move in the right direction.

Eric Wolfe: Okay and then in your January Slide deck, you said that 62% of customers, who are staying longer 12 months, 45% longer than two years.

Eric Wolfe: Just curious what type of ECR is these customers are getting versus shorter duration customers, obviously moving rates have gone down the concert place goes up so trying to understand.

Scott: Obviously, as moving rates, you know, have gone down, the cost of space goes up. So try and understand if the magnitude of the difference between those longer duration customers versus shorter duration customers has changed. So the shorter duration customers will typically get a larger ECRI if they come in on some type of promotional or introductory rate.

Eric Wolfe: The magnitude of difference between those longer duration versus shorter issued customers is changing.

Eric Wolfe: So.

Eric Wolfe: The shorter duration customers will typically get.

Eric Wolfe: Our larger east Cri, if they came in on some type of promotional or introductory rate.

Scott: And after that, the longer-term customers typically will get a smaller percentage increase because we're just trying to get them on the street. Okay, maybe just one last clarification. Did you say, in response to the prior question, the 20 cents of dilution from CFO value acquisitions was really just from the prior year because, You can kind of take your share count times that 20 cents; it's sort of like 40, 45 million dollars to try to understand how you'd get to that level of dilution based on the amount of acquisitions that you just referenced? Yes, so that actually comes from multiple years

Eric Wolfe: And after that.

Eric Wolfe: The longer term customers typically you'll get a smaller percentage increase because we're just trying to get them to street rate.

Speaker Change: Okay, and then maybe just one last clarification did you say in response to the prior question of 'twenty.

Speaker Change: Of dilution from CFO value add acquisitions was really just from the prior year because of it.

Can you kind of just take your share count in terms of <unk>.

Speaker Change: Sort of like 40 $45 million I'm trying to understand how you get.

To get to that level of dilution based on.

Speaker Change: The amount of acquisitions that you just referenced.

Speaker Change: Yes, so that actually comes from multiple years. So some of those <unk> are from 2022, <unk> 2023, <unk> 2024, Cfos certificate of occupancy deals, it's basically as they get up to the run rate of a stabilized property and so it's not just 2020 for dilution in 2024.

Scott: So some of those CFOs are from 2022 CFOs, 2023 CFOs, 2024 CFOs, certificate of occupancy deals. It's basically as they get up to the run rate of a stabilized property. And so it's not just 2024 dilution and 2024 ads. It's a multiple-year, all we're trying to show there is the potential upside if we were to stop adding to that portfolio or to that pool of property. Thank you.....

Speaker Change: It's multiple year all we're trying to show there is that potential upside if we were to stop adding to that portfolio or to that pool of properties.

Speaker Change: Okay got it thank you.

Speaker Change: Thanks, Eric.

Scott: Our next question will come from Keegan Carl with Wolf Research. Yeah, thanks for the time guys. Maybe first, just what are you guys currently seeing in the transaction market that gives you confidence in your targets and where are you seeing stabilized cap rates at today? So most of our guidance towards acquisition is already identified and under contract. I think we only have about $50 million unidentified.

Speaker Change: Our next question will come from the line of Keegan Carl with Wolfe Research.

Keegan Carl: Yeah. Thanks for the time guys.

Keegan Carl: Maybe first just what are you guys currently seeing in the transaction market that gives you confidence in your target and where are you seeing stabilized cap rates at today.

Speaker Change: So most of our <unk>.

Keegan Carl: <unk> towards acquisition has already identified and under contract, particularly on about $50 million on identified.

Joseph Daniel Margolis: And I think between now and the end of the year, we'll find $50 million. And if it makes sense, we'll find more. And if it doesn't make sense, we won't do it, right? We have plenty of capital, but we're only gonna do things that are accretive to our shareholders. Market cap rate, I think, is a very difficult discussion because transaction volume is very low.

Keegan Carl: And I.

Keegan Carl: I think between now and the end of the year, we'll find $50 million.

Keegan Carl: If it makes sense, we'll find more and if it doesn't make sense, we wont do it right. We have plenty of capital, but we're only going to do things that are accretive to our shareholders.

Keegan Carl: Market cap rate I think is a very difficult discussion.

Joseph Daniel Margolis: Transactions that we see close seem to have a story behind them, you know, the last property in a closed end fund or a family where something happened to the patriarch or matriarch who owned the property. There doesn't seem to be enough transactions where you can really, you know, say this is a market cap rate. So it's a very difficult thing, and I wouldn't want to put a number on it. Got it, that's fair. And I'm going to sound like a broken record here on this one.

Keegan Carl: Transaction volume is very low.

Keegan Carl: Transactions that we see close seem to have a story to them. The last property in a closed end fund or.

Keegan Carl: Family, where something happened to the patriarch from HCR chrome the property.

Keegan Carl: There doesn't seem to be enough transactions, where you can really.

Keegan Carl: So this is a market cap rate so it's.

Speaker Change: It's a very difficult thing and I wouldn't want to put a number on it.

Got it that's fair and I'm going to sound like a broken record here on this one and then I'm going to ask another question about the storage Express deal. So I know when you guys. Initially mentioned youre going to swap some stores between that platform and your extra space platform I'm, just curious what you've learned so far and if we can expect some more assets, especially from LSI portfolio to be added to this platform in 2024.

Joseph Daniel Margolis: I'm going to ask another question about the Storage Express deal. So I know when you guys initially mentioned you were going to swap some stores between that platform and your Extra Space platform. I'm just curious what you've learned so far and if we can expect some more assets, especially from the LSI portfolio, to be added to this platform.

Joseph Daniel Margolis: Yeah, I think we will see more changes in Extra Space Storage Express and life storage stores as we learn how best to optimize revenue and then optimize NLI at these stores. And we're really trying to learn, you know, what is the mix of size of the store, rent per square foot, population saturation, distance from another one of our branded stores, crime rates in the area, lots and lots of driving distances, lots of factors that we can optimize NOI with a store that is fully staffed, that is partially staffed, or that is managerless, if you will. And as we learn those lessons, we'll Are you willing to share any sort of quantification of performance?

Speaker Change: Yes, I think we I think we will see.

Speaker Change: More changes in extra space storage express and life storage stores.

Speaker Change: As we learn.

Speaker Change: How best to optimize revenue and then optimize NOI at these stores.

Speaker Change: And we're really.

Trying to learn what is the mix of size of the store rent per square foot.

Speaker Change: Population saturation distance from another one of our branded stores crime rates in the area.

Speaker Change: Lots and lot driving distances lots and factors that we can optimize NOI with the store that has is fully staffed that is partially staffed or that is as manager list. If you will and as we learn those lessons will apply it not only to our existing.

Speaker Change: <unk> portfolio, but to our acquisition strategy.

Speaker Change: Are you willing to share any sort of quantification of performance on stores you would have shifted from one platform to another is too early to tell.

Joseph Daniel Margolis: One platform to another is too early to tell. I mean, the only thing I'm really willing to share, because some of this, I think, is the secret sauce, is that Storage Express had some stores that were, were, you know, fairly large, right? Their average store size was 36,000 square feet, half of our average store size. They had some stores that were 80,000 square feet. And we didn't, you know; those stores don't make any sense to work on a managerless basis.

Speaker Change: I think the only thing I'm really willing to share. Some of this I think is secret sauce is storage expressed had some stores that were.

Speaker Change: Fairly large write their average store size was 36000 square feet half of our average store size. They had some stores. They were 80000 square feet and we did those stores don't make any sense to work on a manager list basis.

Joseph Daniel Margolis: Got it. Fair enough. Thanks, Gary.

Speaker Change: Sure.

Speaker Change: Got it fair enough thanks, guys.

Ronald Kamdem: Sure. Our next question will come from the line of Ronald Kamdem with Morgan Stanley. Rawls, your line is now open. Great. Two quick ones from me.

Speaker Change: Sure.

Speaker Change: Our.

Speaker Change: Question will come from the line of Ronald Camden with Morgan Stanley.

Ronald Kamdem: Ross Your line is now open.

Ronald Kamdem: Great.

Ronald Kamdem: Two quick ones from me.

Operator: So the first is just want to understand the comments on the ECRIs. So it sounds like there's been sort of no change in magnitude. For more information, visit www. FEMA.gov. I hope I shared that correctly.

Ronald Kamdem: So the first is just wanted to understand the comments on the ECR eyes.

Ronald Kamdem: So it sounds like there has been sort of no change in magnitude.

Ross: Or sort of frequency just want to make sure I understood that correctly and then how should we think about the first half versus second half of the year.

Scott: And then how should we think about the first half versus the second half of the year? So there's... In general, we haven't made any change in frequency for ECRI. That being said, we're always testing things, so there are outliers. And what was the second question? The cadence.

Cadence as youre going through the.

Ross: The same store.

So there is.

Speaker Change: In general there is there is no we haven't made any change in frequency for Esri were that being said, we're always testing things. So there are outliers.

Speaker Change: And what was the second question the cadence and Ron I think the best way to look at that is it depends a little bit on where you are on the guidance. So if you are at the bottom end of the guidance that obviously you can imply that you are negative for longer midpoint youre negative.

Scott: And Ron, I think the best way to look at that is it depends a little bit on where you are on the guidance. You know, so if you are at the bottom end of the guidance, that obviously is going to imply that you're negative for longer. Midpoint, you're negative. Even at the top end of guidance, it does imply that you tick slightly negative for a period of time. But I think in none of those scenarios do we have kind of the Nike swoosh, so to speak, where you see rapid acceleration.

Speaker Change: Even at the top end of guidance. It does imply that you do take slightly negative for a period of time, but I think in none of those scenarios do we have kind of the Nike swoosh, so to speak where you see rapid acceleration and the concept. There is we have some many customers moving in each month at lower <unk>.

Scott: And the concept there is that we have so many customers moving in each month at lower rates that it does take some time to move those rates up and to really start seeing that accelerate. So even if you did get pricing power this summer, the benefit of those prices of those customers wouldn't necessarily impact you until later in the year as they get rate increases and into next year. And then my second one, if I may.

Speaker Change: Rates that it does take some time to move those rates up and to really start seeing that accelerate so even if you did get pricing power. This summer the benefit of those pricing those customers wouldn't necessarily impact you until later in the year as they got rate increases and into next year.

Speaker Change: Great and then my second one if I may.

Joseph Daniel Margolis: I think one of your competitors made an interesting comment, there, start to accelerate, and markets that went higher. And I guess I'm curious, as you're thinking about your portfolio. Thank you guys. Comment around. Is there...

Speaker Change: I think one of your competitors made an interesting comment that they had actually already seeing some of their markets.

Speaker Change: Start to accelerate.

Speaker Change: That maybe.

Speaker Change: The markets that went up higher during COVID-19, we're taking a little bit.

Speaker Change: Order of longer than I guess, I am curious as youre thinking about your portfolio.

Speaker Change: You guys had been much more successful than peers pushing pricing.

Joseph Daniel Margolis: Different markets and different stages. I'm all right. So I think different markets are always in different stages, right? We commented earlier on New York, you know, being above the portfolio performer in 2023, and it was below in 2021 and 2020.

Speaker Change: Your comments around is there sort of are different markets in different stages and have you seen some already may be start to turn around and pick up.

Speaker Change: So I think different markets are always in different stages right.

Speaker Change: Meant that earlier on New York.

Speaker Change: Being.

Speaker Change: Above par.

Speaker Change: Portfolio performer in 2023, and it was below in 2021 and 'twenty four.

Joseph Daniel Margolis: You know, Florida was a great market in previous years, and Florida's Having More Difficulties. And it's one reason that we believe in a highly diversified portfolio, because we want to have exposure to all sorts of markets, markets that are, you know, accelerating, decelerating, more flat markets that have, you know, you know, no exposure to new development, have more exposure to new development, or are coming out of the And by having a highly diversified portfolio, and our portfolio got more diversified with this merger, we think we'll smooth out our return. So I don't know if I can identify a major market that's accelerating. We certainly have markets like Los Angeles that are still doing very well, but I don't know of a major market that's excellent.

Speaker Change: Florida was a great market for prior years.

Speaker Change: And Florida is having more difficulty now and it's one reason that we believe in a highly diversified portfolio because we want to have exposure to all sorts of markets markets that are.

Speaker Change: Accelerating decelerating more flat markets that have.

Speaker Change: No exposure to new development have more exposure to new development or coming out of the development cycle and by by having a highly diversified.

Speaker Change: Portfolio and our portfolio of <unk> diversified with this merger.

Speaker Change: We think will smooth out our returns.

Speaker Change: So.

Speaker Change: I don't know if I can identify a major market. That's accelerating we certainly have markets like Los Angeles that are still doing very well.

Speaker Change: But I don't know of a major market that's accelerating.

Joseph Daniel Margolis: Thank you. [inaudible] Thanks, Ron. Our next question will come from the line of Michael Mueller with J.P. Morgan. Yeah, hi.

Speaker Change: Great. That's it for me and we appreciate the you.

Speaker Change: New move in disclosures that was helpful.

Speaker Change: Thanks, Ron.

Speaker Change: Okay.

Speaker Change: Our next question will come from the line of Michael Mueller with Jpmorgan.

Michael William Mueller: So hopefully, two quick ones here. First, how far through the planned LSI ECRIs are you? And then on the investment front for the CEOs and, you know, lease up acquisitions, are you seeing more opportunities for, I guess, maybe some somewhat busted developments, or on just new, brand new ground up investments? So, we've completed the ECRI program for all.

Michael Mueller: Yes, hi.

Michael Mueller: Two quick ones here first.

Michael Mueller: First how far through the planned LSI ECR is are you and then on the investment front for the Ceos.

Michael Mueller: Lease up acquisitions or are you seeing more opportunities.

Michael Mueller: I guess, maybe somewhat busted development or on just new brand new ground up.

Michael Mueller: Investments.

Michael Mueller: So.

Michael Mueller: We've completed.

Michael Mueller: The <unk> program for <unk>.

Scott: LSI customers who were customers at the close, Okay, so they're now on the normal site, you know, as new customers come in, they'll be on the normal program. I don't think we've seen many busted developments or developments that, you know, aren't leasing up as well. They're disappointed developments that look like really attractive opportunities to us yet. I don't think that's meaningful.

Michael Mueller: All.

Michael Mueller: LSI customers, who were customers at closing, okay, alright, so theyre now on than the normal site.

Michael Mueller: New customers come in and they'll be on the.

Michael Mueller: The normal program.

Speaker Change: I don't think we've seen many.

Busted development or development that.

Our leasing up as well, they're disappointed development that looked like really attractive opportunities to us to us yet I don't think thats meaningful.

Scott: Got it. Okay, thank you. Thanks, Mike.

Speaker Change: Yes.

Speaker Change: Got it okay. Thank you.

Speaker Change: Okay.

Speaker Change: Thanks, Mike.

Eric Thomas Luebchow: Our next question will come from the line of Eric Luebchow with Wells Fargo. Great, great. Thanks for taking the question. Could you please comment a little bit on the dual brand strategy if you're seeing any top of funnel benefits from operating, you know, LSI and EXR separately in some of your markets or, you know, if extra operating expenses make that, you know, too complicated or costly in terms of operations? Yeah, sure.

Speaker Change: Okay.

Speaker Change: Our next question will come from the line of Eric <unk> with Wells Fargo.

Eric Wolfe: Great great. Thanks for taking the question.

Eric Wolfe: Could you comment a little bit on the dual brand strategy, if youre seeing any top of funnel benefits from operating LSI ESR separately and some of your markets or extra.

Eric Wolfe: Extra operating expenses make that.

Eric Wolfe: Too complicated or costly in terms of in terms of operations.

Joseph Daniel Margolis: Thank you for the question. So the premise of the dual brand strategy was that by having more digital real estate, we would get more clicks and, therefore, more rentals, and that would pay for the incremental cost of running two brands. So if you think of the Google landscape in three pieces, there's the paid section, and we absolutely are having more digital real estate and more clicks there. And that's because we pay for it. So that's easy. We knew that it would happen.

Speaker Change: Yes sure. Thank you for the question. So the premise of the dual brand strategy was that by having more digital real estate, we would get more clicks and therefore more rentals than that would pay for the <unk>.

Speaker Change: The incremental cost of running two brands.

Speaker Change: So if you think of the Google landscape in three pieces. There is the page section and we absolutely are.

Speaker Change: Having more more digital real estate and more clicks, there and thats because we pay for it. So that's easy we knew that would happen and then the local section in the map where the map of peers. We are seeing more presence there and thats continuing to improve over time, so that seems to be <unk>.

Joseph Daniel Margolis: And then the local section in the map, where the map appears, we are seeing more presence there, and that's continuing to improve over time. So that seems to be working as planned. And then the last section, the SEO section or the organic section, section takes time, right?

Speaker Change: Working as planned.

Speaker Change: And then last section the SCO section or the organic sex section.

Joseph Daniel Margolis: When we buy an individual property, it takes time for us to get that property up to the extra space organic standards, so that's moving in the right direction, but we really need more time to see where we end up and if that trade-off of, you know, more clicks, more rentals, is revenue positive. Okay, I appreciate that.

Speaker Change: It takes time right when we buy an individual property. It takes time for us to get that property up to the.

Speaker Change: Extra space organic standards. So that's moving in the right direction, but we really need more time to see where we.

Speaker Change: Where we'll end up and if that trade off of.

Speaker Change: More clicks more rentals.

Speaker Change: Is is revenue positive.

Scott: And just one follow-up on the guide, and I know Scott touched on this, that so the G&A guide of, you know, 180 million plus, I know you're, you had some seasonality in your Q4, but you were at a run rate of around 160 million annualized. And maybe you could just kind of help us bridge those two numbers. You know, when we'll see kind of more of the G&A cost synergies that you touched on really flow into the P&L from the G&A side. Thank you.

Speaker Change: Okay, I appreciate that and just.

Speaker Change: One follow up on the guide and I know Scott touched on this so the G&A guide of $180 million plus I know your you had some seasonality in Q4, but you're at a run rate of around $160 million annualized and maybe you could just kind of help us bridge those two numbers.

Speaker Change: When we will see kind of more of the G&A cost synergies that you touched on really flow into the P&L from the G&A side. Thank you.

Speaker Change: So the synergies are assuming that.

Scott: So, the synergies assume that the $180 million, and not the lower number, the number that you saw in the fourth quarter, would have been even greater than the $39 million that we referred to if we were able to achieve the fourth quarter run rate. Now, that doesn't mean we're done there. I think that we're going to continue to look for opportunities. That number in the fourth quarter was just a fair amount under due to some transition of employees and hiring and timing and when we brought things on, as well as, you know, there is some seasonality to our GNA with the fourth quarter not being the highest quarter. All right, thank you both. Thank you. Our next question will come from the line of Ki-Bin Kim with Truist. Thank you. Good morning.

Speaker Change: The $180 million and not the the lower number than the number that you saw in the fourth quarter, they would've been even greater than the $39 million that we referred to if we were able to achieve that the fourth quarter run rate now that doesn't mean, we're done there I think that we're going to continue to look for opportunities that number in the fourth quarter was just a fair amount under due to some.

Speaker Change: <unk> of employees and hiring and timing and when we brought things on as well as.

Speaker Change: There is some seasonality to our G&A with the fourth quarter not being the highest quarter.

Speaker Change: Alright, Thank you Bob.

Bob: Thanks Keith.

Ki Bin Kim: Our next question will come from the line of Keybanc Kim with truest.

Ki Bin Kim: Yes.

Ki Bin Kim: Just going back to the street race, I know this is just one variable in the whole equation, but I was curious at the midpoint of your guidance, what you're implying for the street race for the year 2024? So it's difficult to break it out exactly. I think that we are saying we don't expect to see significant growth in street rates. They will be, you know, at the midpoint; we do expect occupancy to be relatively flat, but, you know, we don't feel like it's helpful to necessarily break those out since there's one component of the total model, but we are not expecting, you know, significant street rate power. But I'm guessing you probably expected it to... reach flat year over year at some point, you know, in the second half. Is that fair to assume? However, sequentially, we do expect them to go up month over month. I think it'll depend a little bit on how this leasing season goes. You know, I think that we were disappointed last year.

Kim: Thank you good morning.

Ki Bin Kim: Just going back to the street rates I know this is just one variable to the whole equation, but I was curious at the midpoint of your guidance, what you're implying for the street rates for the year in 2024.

Ki Bin Kim: Okay.

Ki Bin Kim: It's difficult to break it out exactly I think that we are saying, we don't expect to get significant growth in street rates. They will be at the mid point, we do expect occupancy to be relatively flat, but we didnt. We don't feel like its helpful to necessarily break those out at since there is one.

Ki Bin Kim: Component of the total model, but we are not expecting.

Ki Bin Kim: Significant street rate power this year.

Speaker Change: But I'm guessing you probably expect it to.

Speaker Change: Rich flat year over year at some point.

Speaker Change: Second half is that fair to assume.

Speaker Change: Sequentially, we do expect them to go up month over month, I think it will depend a little bit on how this leasing season goes I think that we were disappointed last year. We were at a point last year, where we raised rates significantly January through March and then the leasing season came into housing.

Scott: We were at a point last year where we raised rates significantly January through March, and then the leasing season came, and housing. The lack of home sales, I think, impacted last year. And so, I think that we're a little gun shy and don't want to make that mistake again. Okay. And the second question on your bridge loans: you guys are aiming for a pretty substantial increase in activity. I was just curious if you could provide some color around kind of implied valuation cap rates or LTVs, just to get a better sense of what those deals look like.

Speaker Change: Lack of home sales I think impacted last year, and so I think that we're a little gun shy and don't want to be too.

Speaker Change: Don't want to make that mistake again.

Speaker Change: Okay and the second question on your bridge loans.

Speaker Change: You guys are guiding for a pretty soft.

Speaker Change: A substantial increase in activity I was just curious if you can provide some color around kind of implied valuation cap rate for ltvs just to get a better sense of what those deals look like.

Joseph Daniel Margolis: Yeah, so part of the increase in bridge loan balances is our plan to hold more of the whole notes and not sell as many A notes. Now that can change as the year unfolds, but the whole bridge, the whole bridge loan now is eight and a half to 9%. So we don't feel that it's a bad use of capital at this point. The fundamentals of the loans are unchanged, you know; we still will lend up to 80% of our underwritten value. We'll take an operating reserve, an interest reserve that's a recourse obligation to a creditworthy entity so we know that there is capital to pay the debt service and operate the property. We require that we manage the property. We require an interest rate cap, which is less important now than when we started the program.

Speaker Change: Yes, so part of the increase in bridge loan balances is our plan to hold more of the whole notes and not sell as many a notes now that can change as the year unfolds, but.

Speaker Change: The whole bridge the whole bridge loan now is eight 5% to 9%. So we don't feel thats a bad use of capital at this point.

Speaker Change: The fundamentals of the loans are unchanged, we still we will lend up to 80% of our underwritten value will take.

Speaker Change: Operating reserve an interest reserve, that's a recourse obligation to a creditworthy entity. So we know that there is capital to pay.

Speaker Change: Pay the debt service and operate the property we require that we manage the property we require a interest rate cap, which is less important now than when we started the program so that.

Joseph Daniel Margolis: So the fundamentals of the long program haven't changed. And you do have a pretty sizable maturity in the Bridgeland program in 2025. What's the base case scenario? Is it that those bonds become rolled over and extended, or do they truly mature, and we should just model in some decreases in interest income? On, I'm not sure there is a base case.

Speaker Change: <unk>.

Speaker Change: The fundamentals of the loan program hasn't changed.

Speaker Change: And you do have a pretty sizeable maturity and the bridge loan program in 2025.

Speaker Change: What's the base case scenario if that does become.

Speaker Change: Rolled over an extended or do they mature and we should just model and some decreases in interest income.

Speaker Change: I am not sure there is a base case I mean, we're going to handle every loan.

Joseph Daniel Margolis: I mean, we're going to handle every loan as it comes up. And I think some will extend, some will get paid off, and some will buy the collateral, and the, you know, grow. I think the... The attractiveness of the product will remain, and we should continue to be able to make new loans to backfill ones that are maturing in some way or another. Okay, thank you guys. Sure. Thanks, Kevin. Our next question will come from the line of Caitlin Burrows with Goldman Sachs. Hi everyone.

Speaker Change: As it comes up and I think some will extend some will get paid off and some will buy the collateral.

Speaker Change: <unk>.

Speaker Change: Grow I think.

Speaker Change: Sure.

Speaker Change: The attractiveness of the product will remain and we should continue to be able to make new loans to backfill ones that are.

Speaker Change: That are maturing in somewhere or another.

Speaker Change: Okay. Thank you guys.

Speaker Change: Alright, Thanks, Kevin.

Speaker Change: Our next question will come from the line of Caitlin Burrows with Goldman Sachs.

Caitlin Burrows: Maybe, could you give some more color on new supply expectations for deliveries this year, but also what are you seeing on starts, timing of construction, and how that impacts your longer-term view? So our data, which we look at, for our properties, not for the overall development landscape, is pretty encouraging. We see about a 30% drop in extra space same-store pools that will be affected by new development in 2024. But when you look at all our wholly owned stores, it's even a larger drop, almost 40%.

Caitlin Burrows: Hi, everyone, maybe could you give some more color on new supply expectations for deliveries. This year, but also what are you seeing on starts timing of construction and how that impacts your longer term view.

Caitlin Burrows: So our our data, which we look at.

Caitlin Burrows: Yes.

Caitlin Burrows: For our properties not for the.

Caitlin Burrows: Overall development landscape.

Caitlin Burrows: Is pretty encouraging we see about a 30% drop in <unk>.

Caitlin Burrows: Extra space same store pools that will be affected by new development.

Caitlin Burrows: In 2024, and when you look at all of our wholly owned stores, it's even a larger drop almost 40%.

Joseph Daniel Margolis: So new development isn't going away. We still have to, the market still has to lease up the ones that were delivered in previous years. But the environment is certainly getting better.

Caitlin Burrows: So new development isn't going away, we still have the market still has to lease up the ones that were delivered in prior years.

Caitlin Burrows: But the environment is certainly getting better.

Caitlin Burrows: Okay. And then maybe just one more to follow up on the move in rate topics, which have been talked about a lot. I'm wondering if you could just comment on how you expect either EXR and or the industry to regain pricing power with new customers. Is it housing market related? And you need that to pick up? I know you mentioned marketing spend will be up, but what makes this new customer pricing power improve? And is there anything you can do to help it?

Speaker Change: Got it Okay, and then maybe just one more to follow up on the move in rate Capex, which has been talked about a lot I am wondering if you could just comment on how you expect.

Speaker Change: <unk> the industry to regain pricing power with new customers is it.

Speaker Change: Housing market related and you need that to pick up I know you mentioned marketing spend will be up but what makes this new customer pricing power improve and is there anything you can do to help it.

Joseph Daniel Margolis: So the housing market certainly will help, but it's not the sole driver of demand for self storage. I think people are moving, you know, moving more, whether, you know, right now, almost half of the people who tell us they're storing because they're moving or moving from apartment to apartment. So more transition is just good. You know, the single-family home rental business; the more that grows, I think that's great. You know, that helps people move in and out of homes without having to buy them, without having to worry about a mortgage.

Speaker Change: So the housing market certainly will help but it's not the sole.

Speaker Change: Driver of demand for self storage I think just people.

Moving more weather.

Speaker Change: Right now.

Speaker Change: Most half of the people, who tell us they are storing because theyre moving or moving apartment to apartment.

Speaker Change: More more transition is just good.

Speaker Change: The single family home rental business to more of that growth I think that's great that.

Speaker Change: That helps people moving in and out of homes without having to buy them without having to worry about a mortgage.

Joseph Daniel Margolis: So, a strong economy is always better than a weak economy, and all indications are now that we're going to have more of a soft landing than a recession. So I think all of those things could help improve customer demand. Got it, thank you. K1. Our next question will come from the line of Juan Sanabria with BMO Capital Markets. This is Robin Hayden, and I'm sitting here for Juan.

Speaker Change: So.

Speaker Change: A strong economy is always better than a weak economy and all indications are now that we're going to have more of a soft landing in a recession.

Speaker Change: So I think all of those things can help it.

Speaker Change: Improve customer demand.

Speaker Change: Got it thank you.

Speaker Change: Thanks Caitlin.

Speaker Change: Our next question will come from the line of Juan Sanabria with BMO capital markets.

Speaker Change: Yeah.

Robin Handle: Hi, This is robin handle I'm sitting in for <unk>.

Robin Hayden: I just wanted to follow up on how you expect the move out and move in spreads to trend throughout the year, and what is the spread for life storage, and how do you expect that spread to trend? Yes, so we focus as much on occupancy as we do move-ins and move-outs, and I'll give you an example. Life Storage in the fourth quarter had elevated move-outs due to the auctions, but they also had elevated move-ins. So, you know, we're managing probably more to occupancy than we are move-ins and move-outs, and we are assuming that occupancy is fairly flat throughout this year. On the extra space same-store pool, the life storage pool, we would expect to close that gap, so we would expect move-ins to be higher than move-outs.

Robin Handle: To follow up on how you expect move out and move in spreads to trend throughout the year.

Juan C. Sanabria: And what is the spread for life storage and how would you expect I expect that trend.

That spread to trend.

Speaker Change: Yes, so we focus as much on occupancy as we do move ins and move outs and then I'll give you. An example, I mean.

Speaker Change: Life storage in the quarter and the fourth quarter elevated move outs due to the auctions, but they also had elevated move in so.

Speaker Change: We are managing.

Speaker Change: Probably more to occupancy than where move ins and move outs and we are assuming that occupancy is fairly flat throughout this year on the extra space same store pool. The life storage pool, we would expect to close that gap. So we would expect move ins to be higher than move outs.

Joseph Daniel Margolis: And do you feel like you're ready to re-engage in sort of larger external growth at this point? Or are you still focused internally on executing a live storage? So we're absolutely focused on achieving our goals with the life storage portfolio. We are also very focused on the testing and efforts we're making with respect to remote management. I think that will be another big point. We will grow our management business significantly this year. Not including the LSI assets, we added 225 new managed stores last year.

Speaker Change: On.

Speaker Change: Do you feel like Youre ready to Reengage in sort of larger external growth. At this point are you still focused internally on executing the life storage.

Speaker Change: So we're absolutely focused on.

Speaker Change: Achieving our goals with the law.

Speaker Change: Life storage portfolio.

Speaker Change: We are also.

Speaker Change: Very focused on.

Speaker Change: The.

Speaker Change: Testing and efforts, we're making with respect to remote management I think that will be another big point.

Speaker Change: We will grow our management business significantly this year, we added not including the LSI assets. We added 225, new managed stores last year.

Joseph Daniel Margolis: That's the most we've ever added in a year, and we have a very significant and robust pipeline there. We've talked about the Bridge Loan Program. We'll continue to grow that. I think our joint venture partners were somewhat quiet in 2023, but there are indications that that will turn around.

Speaker Change: We've ever added in a year and we have a very significant and robust pipeline. There we've talked about the bridge loan program will continue.

Speaker Change: To grow that.

Speaker Change: And.

Speaker Change: I think our joint venture partners were somewhat quiet in 2023, but there is indications that that will turn around and thats, great capital light accretive growth for us and we will certainly get back into that business.

Joseph Daniel Margolis: And that's great capital light accretive growth for us, and we'll certainly get back into that. So we're in a position to take advantage of any growth that is both strategic and accretive, and we're not afraid to do so.

Speaker Change: So we're in a position to take advantage of whatever.

Growth that is both strategic and accretive and.

Joseph Daniel Margolis: Thanks for having me. That concludes today's question and answer session. I'd like to turn the call back to Joe Margolis for closing remarks. Great, thank you. Lots of questions about, you know, the overall environment, and what our assumptions were for them. And I can't tell you whether our assumptions are right or wrong.

Speaker Change: We're not afraid to do so.

Speaker Change: Thank you.

Speaker Change: Thanks Robin.

Speaker Change: That concludes today's question and answer session I would like to turn the call back to Joe Margolis for closing remarks.

Joseph D. Margolis: Great. Thank you.

Joseph D. Margolis: Lots of questions about.

Joseph D. Margolis: The overall environment, then what our assumptions were for them and I can't tell you, whether our assumptions are right or wrong, but I do have an extraordinary amount of confidence that no matter what the market conditions are.

Joseph Daniel Margolis: But I do have an extraordinary amount of confidence that no matter what the market conditions are, our platform and our people are in a position to maximize our performance and take advantage of whatever happens in the market. So, thank you all for your time today, and thank you for your interest. This concludes today's conference call. Thank you for participating. You may now disconnect.

Joseph D. Margolis: Our platform and our people are in a position to maximize our performance and take advantage of.

Speaker Change: Whatever occurs in the market. So thank you all for your time today and thank you for your interest in extra space.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].